Eastern European retailers head west

Global credit crunch and rapid inflation conjure first major crisis for retailing in Central and Eastern Europe.
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A new report by retail analysts Verdict Research has found that the twin threats of the global credit crunch and rapid inflation conspire to conjure the first major crisis for retailing in Central and Eastern Europe.

Verdict says that the cash flow management problems this creates will hamper most retailers in the region. However, in turn this marks opportunities for incumbent Western players to acquire a local champion if they can raise sufficient funds.

Meanwhile, the report goes on to say that the best CEE retailers are forcing their expansion temp by conquering new markets in the region and have started to expand into the mature markets of the old EU.

In 2007, CEE's retail market as a whole was worth E179.0 billion, about half the size of Germany and slightly less than half of France, having grown by 56.4 per cent over the 2002-07 period (compared to 15.4 per cent for Western Europe's top six markets).

However, Verdict Research predicts that growth will now considerably slow from its peak performance of recent years, with the firm saying that the ripple effect from the credit crunch will be witnessed across the region.

Meanwhile, a further demonstration of how successfully CEE retail has developed are the first tentative signs of them moving into the Western markets. Hungarian grocer CBA is planning to increase its presence abroad and is launching stores selling Hungarian products in Zurich, Vienna and Brussels. The retailer has already fortified its presence in Bulgaria and the Baltics.

Clothing specialists from CEE are also looking likely to become a more common feature on western Europe's High Streets. Polish clothing firms are already beginning to expand abroad - usually targeting neighbouring countries first. Among these are LPP, one of Poland's largest clothing retailers, KAN, Artman and Semax.

Czech specialist Kenvelo is already a familiar sight on a number of High Streets in the west, for example it expanded into Germany through an acquisition in 2003.


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